A U.S. federal appeals court in Manhattan has overturned the fraud conviction of Neil Cole, founder and former CEO of Iconix Brand Group, ruling that his retrial violated constitutional protections against double jeopardy. The decision, reported by Reuters, marks a major victory for Cole after years of legal battles stemming from allegations of accounting fraud at the once-prominent apparel licensing company.
The 2nd U.S. Circuit Court of Appeals said Cole’s 2022 conviction on eight charges and his 18-month prison sentence were unconstitutional because prosecutors retried him using a theory already rejected by a previous jury in 2021. The panel ordered the indictment dismissed, effectively ending the case.
Appeals court finds double jeopardy violation
According to the three-judge panel, Cole’s second trial relied on the same “round trip” transaction theory that a previous jury had already rejected when it acquitted him of conspiracy and deadlocked on related counts. Writing for the court, Circuit Judge Susan Carney stated that the earlier verdict showed jurors doubted Cole’s alleged role in coordinating fraudulent “overpayment-for-giveback” deals.
“Evidence of his participation in those agreements was indisputably essential to Cole’s convictions,” Carney wrote. “Accordingly, the Double Jeopardy Clause barred Cole’s retrial.”
Prosecutors had accused Cole of inflating Iconix’s 2014 revenue by arranging deals with Hong Kong-based Li & Fung, in which the company allegedly overpaid for assets with the understanding it would later be reimbursed. The transactions, prosecutors said, created an illusion of higher sales and profits.
Reaction from Cole and legal implications
In a statement, Cole said he felt vindicated by the ruling and expressed optimism about the future of Iconix’s brand management business. The U.S. Attorney’s Office in Manhattan, led by Jay Clayton, declined to comment, citing the ongoing government shutdown.
The reversal concludes a case that began more than six years ago, highlighting the complexities of financial prosecutions built on accounting practices and internal agreements. Iconix, based in New York, owns or licenses brands such as Candie’s, Danskin, London Fog, Joe Boxer, Pony, and Rocawear, the latter created by rapper Jay-Z.
In 2019, Iconix paid $5.5 million to settle U.S. Securities and Exchange Commission accounting charges without admitting wrongdoing. Private equity firm Lancer Capital took the company private in 2021.
The case is U.S. v. Cole, 2nd U.S. Circuit Court of Appeals, No. 23-7566.